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Hello.

I am a US citizen who has lived and worked in Canada all my life. I have permanent resident status in Canada, and very shortly will have my Canadian citizenship.

All my accounts are in Canada, i have no criminal record, have always been law-abiding, and have always filed my taxes on time (Revenue Canada).

As with most people, I was unaware of the filing requirements but, for the last month or so, have got my paperwork in order through an Accountant firm and will be filing 6 years of income tax returns and 6 years of FBARS tomorrow morning.

I understand the FBAR penalties are stiff, but I am also aware that even for a non-willfull violation no penalties can be levied if you have a 'reasonable cause'.[/B]

Here are my two questions;

If they reject my reasonable cause and deem necessary to place penalties on me for late FBAR filings. What happens if I refuse to pay them?

If for example, I refuse to fork over my hard earned $ because of filing late paperwork, I am assuming they have little power north of the border to freeze my accounts.

I agree that I would be in trouble if I went to the US...but what can they do?

Say that FATCA comes into effect in 2014...then what? Do they have the power to take from me then???

Question 2.

Since the IRS has been employed to collect for these fines and penalties...will the IRS Tax Advocate be available to me regarding a penalty against late FBAR filing?

For those of you who have not filed as of yet...make sure when you send in your FBARs you have a strong letter outlining your reason for late filing.

I have been told that no one in Canada has been penalized yet. There is a lot of mis-information out there, be careful what you read.

The best to everyone
 

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I'd really be interested in the answer to these questions too. I don't know anything about the question, but my understanding is that Canada will not enforce FBAR penalties and you cannot be extradited for civil or criminal FBAR penalties. I think that Canadians are among the many who have been assessed penalties under OVDI programs. I have not heard that the IRS has assessed penalties against those making quiet disclosures but just give them time: they are after all overworked with so many cases at this point.

Whether the federal officials will eventually detain at the border someone owing FBAR penalties is the big question. See this post by Phil Hodgen, as an anymous testimony is given there and some knowledgable legal minds answer that questions (Hodgen.com).

Personally, I think it better not to give them account information, because they cannot assess penalties if they don't have that information. You might also consider filing a Fifth Amendment FBAR to satisfy filing requirements.
 
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Hello.

As with most people, I was unaware of the filing requirements but, for the last month or so, have got my paperwork in order through an Accountant firm and will be filing 6 years of income tax returns and 6 years of FBARS tomorrow morning.

I understand the FBAR penalties are stiff, but I am also aware that even for a non-willfull violation no penalties can be levied if you have a 'reasonable cause'.[/B]

Here are my two questions;

If they reject my reasonable cause and deem necessary to place penalties on me for late FBAR filings. What happens if I refuse to pay them?

If for example, I refuse to fork over my hard earned $ because of filing late paperwork, I am assuming they have little power north of the border to freeze my accounts.

I agree that I would be in trouble if I went to the US...but what can they do?

Say that FATCA comes into effect in 2014...then what? Do they have the power to take from me then???

Question 2.

Since the IRS has been employed to collect for these fines and penalties...will the IRS Tax Advocate be available to me regarding a penalty against late FBAR filing?



I have been told that no one in Canada has been penalized yet. There is a lot of mis-information out there, be careful what you read.

The best to everyone
Hi Mach 7, welcome to the forum.

If you refuse to pay them, their only recourse at this point is to instigate litigation, which would be rather difficult to actually put in play.When FATCAT comes into effect, yes, they can force the financial institutions who hold your accounts send 30% to IRS.

I don't know anything about Taxpayer Advocate - if you check out this FB page
https://www.facebook.com/groups/281311018546415/#!/groups/281311018546415/members/ and contact Paul Mend, he can probably tell you about it as he has mentioned using them

I am quite curious as to who told you there have been no penalizations in Canada yet, presuming you are referring to FUBAR, not taxes?
 
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When FATCAT comes into effect, yes, they can force the financial institutions who hold your accounts send 30% to IRS.
That is completely illegal and unenforceable under the Canada-US Tax Treaty. This has been stated repeatedly and publicly both by Canada Revenue Agency and by Jim Flaherty, our Finance Minister. Banks in Canada can NOT remit money directly to the IRS, either under that treaty or under Canadian banking legislation. For the IRS to try to collect or enforce tax liabilities or penalties directly from Canadian banks against Canadian citizens would be a clear violation of that treaty. In my non-lawyer opinion, for any Canadian financial institution to comply with a request for funds by the IRS would be illegal and eminently actionable in law in a Canadian federal court. And should be challenged, whether by individuals or in a class-action lawsuit.

Under the Canada-US Tax treaty, neither country can collect any tax liabilities or taxation information from residents of the other country except by requesting such action to be made by the other country's government (in practice, in Canada by Canada Revenue Agency). Under an article of that treaty, acknowledged in public letters by Minister Flaherty, no tax liabilities alleged by the US can be collected in Canada against anyone who was or is a Canadian citizen at the time those liabilities allegedly were incurred.

Please stop repeating as a given what the IRS (illegally) wants you to believe. What they are asking banks to do is, as far as I know (and I have asked Minister Flaherty by email to clarify this) illegal in Canada, and to my certain knowledge is also in violation of the treaty (just read the thing, if you can stand the turgid excuse for English prose in which it was written).

Let's hope our so-called "Harper Government" has the spine to uphold these facts and protect us from this.
 

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Again right

That is completely illegal and unenforceable under the Canada-US Tax Treaty. This has been stated repeatedly and publicly both by Canada Revenue Agency and by Jim Flaherty, our Finance Minister. Banks in Canada can NOT remit money directly to the IRS, either under that treaty or under Canadian banking legislation. For the IRS to try to collect or enforce tax liabilities or penalties directly from Canadian banks against Canadian citizens would be a clear violation of that treaty. In my non-lawyer opinion, for any Canadian financial institution to comply with a request for funds by the IRS would be illegal and eminently actionable in law in a Canadian federal court. And should be challenged, whether by individuals or in a class-action lawsuit.

Under the Canada-US Tax treaty, neither country can collect any tax liabilities or taxation information from residents of the other country except by requesting such action to be made by the other country's government (in practice, in Canada by Canada Revenue Agency). Under an article of that treaty, acknowledged in public letters by Minister Flaherty, no tax liabilities alleged by the US can be collected in Canada against anyone who was or is a Canadian citizen at the time those liabilities allegedly were incurred.
The 30% withholding will be on payments made to non-compliant FFI (Foreign Financial Institution), and it will occur in the United states--but no Canadian bank should be able to do it. Nevertheless, I moved my accounts to a credit union. Here is a website that explains (pdf) (see #7-8).
 
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The 30% withholding will be on payments made to non-compliant FFI (Foreign Financial Institution), and it will occur in the United states--but no Canadian bank should be able to do it. Nevertheless, I moved my accounts to a credit union. Here is a website that explains (pdf) (see #7-8).
Thanks for this. That's a wrinkle that escaped me, and also may have escaped the person who extracted some wording from a BMO-Nesbitt Burns email that I posted elsewhere on this website.

If in fact the 30% (it's stated as 28% in the Qualified Intermediary Agreement stuff from BMO/NB but close enough) is only going to be assessed on US-source income, e.g., US T-bills, savings bonds, or US-head-officed stocks or mutual funds, then there is a simple solution. As I've already advocated elsewhere, if you own any US-sourced investments, dump them now before FATCA hits and reinvest the money in Canada or maybe elsewhere not in the US. That seems too simple, too stupid -- the IRS and US government would thereby be blasting both feet off their own legs, so to speak :D I wish I could believe they're that dumb, and given the dysfunctionality of the US legislative process I guess I can believe it, but it seems too good to be true. Are we really sure of this point?

I do know that FATCA penalizes the FFIs 30% of their US assets if they aren't in compliance (if they haven't reported all their "US person" accounts, though how they can prove to IRS they've reported them all without in fact reporting all accounts for comparison, including accounts of Canadians who've never had any US citizenship in their lives even at birth, raises even more horrific concerns about imperialism and violation of our sovereignty). Which is why I've moved my accounts to a credit union (actually all my accounts already were with them, it's my RRSP that I moved over to them after dumping every US-anything that was in my portfolio), because they have no US assets at all so IRS can't penalize them so they aren't about to comply with FATCA. And of course no FFI wants to comply with FATCA because of the estimated millions, and with large FFIs it's estimated literally hundreds of millions, of admin costs to be in full compliance. Costs that the FFI will have to pass on to (presumably all) account-holders in (much) higher fees. If you think anti-bank and Occupy Everything protests have been big and noisy now, you ain't seen nothin' yet folks, if that happens.:rolleyes:

But yes, if in fact the witholding occurs only at source for US-source investments, by gum they could enforce withholding from your RRSP or RRIF without violating the Canada-US treaty, I guess. But then if that is the case, who in their right noodle is going to keep one penny of their hard-earned-in-Canada savings in a US-source anything? And what will THAT do to the US economy?

This is starting to sound like a script reject from an ancient "Dumb, Dumber and Dummbest" flick.:clap2:

I read a column a few months ago, I forget whether it was in Economist or in the Guardian, suggesting that Obama and his cabinet are in way over their heads in terms of having a clue how to run a government or a country. It's possibilities like the above that start me wondering whether that column was rhetoric, wishful thinking, or the awful truth. If the latter, are these the people the world really wants sleeping with a black suitcase with a red button on it next to the bed? :eek:
 
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I am quite curious as to who told you there have been no penalizations in Canada yet, presuming you are referring to FUBAR, not taxes?

I actually did my own research by calling Accountant firms all over the country (Canada). It seems that the words of our Finance Minister and the US ambassador to Canada might have had some effect...who knows.

Basically no one that has filed a 'quiet disclosure' has been penalized or fined. These individuals also attached a letter stating reasonable cause.

As far as I was told, (and read). non-willful violations have a penalty attachment of not more than 10k per account.

In order for the IRS to attach a non-willful penalty, they must first ensure there was no reasonable cause, and your filed FBARs are in order (you didn't lie about your accounts) and you paid all investment income on said accounts.

The 'resonable cause' attachment letter is the big one. I actually got an Accountant firm to write mine up to make sure I had the 'buzz' words right.

The people that went into the OVDI program were basically fined and penalized. The way it was explained to me is that...if you have nothing to hide and have not evaded taxes...DO NOT GO INTO THE PROGRAM.

The Program assumes you have something to hide and is offering you amnesty.

Unfortunatley, for us up here in Canada, we are not steeped in the American way of (tax) life...so how the hell are we supposed to be up on IRS current affairs!

There is your reasonable cause.

So...i will play there game, i have filed my 1040's and fedex'd my FBARs to Detroit accuratley.

But there is no way I am parting with my money that I earned with my own sweat because someone in Washington decided to dip into my bank account. The yanks are losin it!

My opinion of FATCA is this. It WILL be instituted, but in a water down version.

IMHO
 

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14 trillion in private foreign investment

But yes, if in fact the witholding occurs only at source for US-source investments, by gum they could enforce withholding from your RRSP or RRIF without violating the Canada-US treaty, I guess. But then if that is the case, who in their right noodle is going to keep one penny of their hard-earned-in-Canada savings in a US-source anything? And what will THAT do to the US economy?

This is starting to sound like a script reject from an ancient "Dumb, Dumber and Dummbest"
I think that's exactly right; I read another report that said the US would lose 14 trillion in private foreign investment because of FATCA (see here). Let's face it, the world's banks can't comply with the information disclosure without violating the laws in their own countries. And since they can't comply, then foreign FFIs won't be able to do US transactions in the states.

Now there may soon be other solutions if you still want to trade US equities, bonds or other instruments (US dollars are a great thing to short right now). Other markets will open up US dollar transactions: so you will be able to trade US,CDN and international equities/options on the TSX/MSX or some alternative markets in Canada and elsewhere and the transactions will take place in US dollars--but they won't happen in the US. That means that non-US markets will get all the commissions. Right now, I trade CDN oil and gold mining equities and options on the US markets. But I won't be doing that once FATCA is implemented. But I am with you. I'm already 100% out of US investments since the day Obama announced his government's first budget.
 

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Canadian Human Rights laws vs. FATCA

I also believe a strong barrier to FATCA in Canada is our Human Rights legislation.

For many Canadian citizens of US nationality, their only tie to US is "national or ethnic origin": place of birth.

In Canada, banks and financial institution are governed by both the Charter and the Canadian Human Rights Act.

The Human Rights Act specifically prohibits discrimination based on "nationality or ethnic origin". FATCA requires discrimination against US-born Canadian citizens by their banks, because they would "differentiate adversely in relation to any individual" based on "nationality or ethnic origin".

To be rhetorical: Imagine if the US asked Canadian banks to identify all Canadian citizen customers who were born in Pakistan, and to then subject Canadians born in Pakistan to a US reporting and withholding regime which is different than any other nationality!

That's what FATCA asks banks to do – just substitute "Canadians Born in US" for "Canadians Born in Pakistan".

-----------------------------------------------
Here are the specific sections from the Human Rights Act:

"Prohibited grounds of discrimination
3. (1) For all purposes of this Act, the prohibited grounds of discrimination are race, national or ethnic origin, colour, religion, age, sex, sexual orientation, marital status, family status, disability and conviction for which a pardon has been granted.

Denial of good, service, facility or accommodation

5. It is a discriminatory practice in the provision of goods, services, facilities or accommodation customarily available to the general public

(a) to deny, or to deny access to, any such good, service, facility or accommodation to any individual, or

(b) to differentiate adversely in relation to any individual, on a prohibited ground of discrimination.
 

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If you don't pay the FBAR penalties after they knowingly waste their time and money to take it through a US Civil court, they can't do anything to you before or after FCAT to collect, unless you have US property in which case it can be seized. If you travel to the US they still can't do anything. You can't be arrested for a civil debt.

The only reason Canadians aren't specifically excluded from all this is that this one big scary phantom, but toothless boogeymen scares people like you and me into filing.

The only ones that need to be concerned about FBAR are those that are bona fide tax cheats and those that must file an amended tax return because they made a "mistake" and forgot about some income on their previous returns.

It's a sham for the rest of us so don't worry about it. As some have said no one that has filed quietly has had a problem and it's not just Canadians but anyone paying their fair share of taxes in a non-tax haven country.
 
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When I first learned about the filing requirement, like most I became physically ill. It's hard to imagine losing everything you worked so hard for due to a paperwork misunderstanding.

Nonetheless, after that I began to educate myself and hunt for an Accountant.

What impresses me the most about this forum is how many people understand our human rights and privacy laws. This is a comforting fact when talking about FATCA, and will be interesting to see how it is played out come 2014.

How ironic that the country that proudly boasts freedom and democracy are the ones that don't even understand there own laws...let alone another countries.

I have to agree with another poster. If the 'mad max' senario happens and the IRS decides to 'bait and switch' us after filing our FBARs, they are going to have a mob of Dual Citizens to deal with.
 

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I am quite curious as to who told you there have been no penalizations in Canada yet, presuming you are referring to FUBAR, not taxes?

I actually did my own research by calling Accountant firms all over the country (Canada). It seems that the words of our Finance Minister and the US ambassador to Canada might have had some effect...who knows.

Basically no one that has filed a 'quiet disclosure' has been penalized or fined. These individuals also attached a letter stating reasonable cause.

As far as I was told, (and read). non-willful violations have a penalty attachment of not more than 10k per account.

In order for the IRS to attach a non-willful penalty, they must first ensure there was no reasonable cause, and your filed FBARs are in order (you didn't lie about your accounts) and you paid all investment income on said accounts.

The 'resonable cause' attachment letter is the big one. I actually got an Accountant firm to write mine up to make sure I had the 'buzz' words right.

The people that went into the OVDI program were basically fined and penalized. The way it was explained to me is that...if you have nothing to hide and have not evaded taxes...DO NOT GO INTO THE PROGRAM.

The Program assumes you have something to hide and is offering you amnesty.

Unfortunatley, for us up here in Canada, we are not steeped in the American way of (tax) life...so how the hell are we supposed to be up on IRS current affairs!

There is your reasonable cause.

So...i will play there game, i have filed my 1040's and fedex'd my FBARs to Detroit accuratley.

But there is no way I am parting with my money that I earned with my own sweat because someone in Washington decided to dip into my bank account. The yanks are losin it!

My opinion of FATCA is this. It WILL be instituted, but in a water down version.

IMHO
I'm pleased that this is being figured out so that the bulk of people who haven't filed will be ok. But I am that special case in which they may decide to clobber me with fbar because because I had to amend my returns showing that I had not checked the box in schedule B and thus technically deemed willful. I could well be the sacrificial lamb due to my quiet disclosure. As maddening as it is, I myself probably should have entered into OVDI so I could have salvaged at least something. But I agree that anyone else on here are better off not.

Knowing the American attitude, they are going to be enraged by what they regard as defiance and I wouldn't put it past them to realize that they're going to have to demonstrate that they are indeed going to start enforcing the fbar penalties to show they mean business.

I feel so desperately vulnerable right now, especially as I have till July 1, 2016 before I'll be through the statute of limitations for my last delinquent fbars for 2009 (having filed 2010's on time in 2011).

All I can think is that if they try to attack me is that I'll never cross the US border again if they try to ruin me. I will swear on the Bible that my mistakes were innocent and not intentional (not that they're going to believe that)....I would have been in a less onerous position had I not even been filing in the first place. In retrospect, I probably should have just started to comply on a going forward basis instead of amending four years of returns and six years fbars, etc.

I'm going to visit my parents early next year but explain to them that this may in fact turn out to be the very last time I'll be able to do so if this fbar thing becomes ugly.

What was so awful about all this is how no one could give me a straight answer on what to do to protect myself since they wereare legally obliged to stay within the law.
 

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I am starting to wonder if maybe it might be safer for my account and all my posts are deleted. For people like me, this could be the the perfect storm.
 
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I am starting to wonder if maybe it might be safer for my account and all my posts are deleted. For people like me, this could be the the perfect storm.
Is there a way to do this? I am thinking along the same lines.....
 

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paranoia

Man we have some paranoid people out there.
If you just checked the wrong box but reported all of your income you wont hear anything, no one cares.
Unless its criminal there is no reason you need to worry about crossing the border. They don't arrest debtors like they did a few hundred years ago.
And I'll say it once again. They can't collect from you unless you have property in the USA. They know that and so they wont even try and collect. Really. You can just ignore non-criminal FBAR penalties, IF they were to ever try and collect from someone..
 

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Man we have some paranoid people out there.
If you just checked the wrong box but reported all of your income you wont hear anything, no one cares.
Unless its criminal there is no reason you need to worry about crossing the border. They don't arrest debtors like they did a few hundred years ago.
And I'll say it once again. They can't collect from you unless you have property in the USA. They know that and so they wont even try and collect. Really. You can just ignore non-criminal FBAR penalties, IF they were to ever try and collect from someone..
But the point is, I didn't originally declare my UK passive income so could arguably be technically guilty of fraud. They need all the cash they can get right now. All I can hope is that they'll realize I made a good faith disclosure and paid back all my back taxes, interest and penalties as soon as I realized my error, along with the fbars. I'd like to think common sense will prevail but if they turn me into a golden poster child, they'll have to take it up through the courts. I doubt if they would go to all that expense when my total assets are less than $300,000 (including illiquid assets in a private pension scheme and collarateral in our jointly owned flat in London).

My British husband has quite understandably said he'd obstruct any efforts for them to seize our home with a UK court injunction. He has paid all the mortgage for it from HIS account, purely from HIS UK sourced earnings. I will fight it tooth and nail if the s**t hits the fan. Though I am reasonably optimistic they won't try to get blood out of a turnip, it nonethless occurs to me that they may well decide to make an example by randomly clobbering a couple of quiet disclosures just to remind expats that they can do.

I think we all need to decide for ourselves what's the best course of action to take then get on with it and try to stop worrying so much....in my case, the ball's out of my court; I know I did the best I could to try and put things right so that is really all one can do in these sorts of onerous situations. Christmas is coming once again and I have a niece and nephews to think of; I've got to get on with living, especially as this will not be fully cleared up till at least sometime in 2016....I can't be continually living in terror.
 

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If you don't pay the FBAR penalties after they knowingly waste their time and money to take it through a US Civil court, they can't do anything to you before or after FCAT to collect, unless you have US property in which case it can be seized. If you travel to the US they still can't do anything. You can't be arrested for a civil debt.
While I agree with the rest of your comments, I disagree with the last,. If a civil debt has been entered against you (whether private or government) and you don't pay in defiance of a court order, then you are technically in contempt of court and can be arrested. Of course, its not going to happen overnight, there will likely be lots of notices and the like, and chances for you to present your case, and its certainly not going to happen on a trip to the US. I am not going to restrict my movements across the border one bit.
 
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While I agree with the rest of your comments, I disagree with the last,. If a civil debt has been entered against you (whether private or government) and you don't pay in defiance of a court order, then you are technically in contempt of court and can be arrested. Of course, its not going to happen overnight, there will likely be lots of notices and the like, and chances for you to present your case, and its certainly not going to happen on a trip to the US. I am not going to restrict my movements across the border one bit.

IMHO, I honestly don't think that the US government is going to clog up the justice system for people that show 'reasonable cause' when filing late FBAR's.

Do you think that a US judisiary board is going to open up there busy court system for honest people like us who didn't file because they were too busy living and paying taxes in the country the reside?? It's hard enough to keep Revenue Canada happy let alone another entity I was unaware of.

If the above statement happens, there will be so many lawsuits and it will only take one successful one to set a presidence (spelling sorry).

Do you really think they will win when you present your 'reasonable cause' for a non willful penalty?? (Assuming of course that you tabulated everything on your FBARs and your tax history with Canada is clean).

Not to mention, what instruments do they have to advise us of changes to the US revenue system ie: I was NEVER advised and was NEVER told I had to file...and I have had numerous Accountants in the past who have done work for me.

Some could argue that point, but folks...this is life. I work, try to save money, raise my kids, try to make wife #2 happy, and hopefully save for a retirement.

There are a lot of things I do not know, and filing in the states was one of them.

I would hazard to guess that there are individuals that actually LIVE in the US that file there 1040 returns that do not know about the FBAR system (assuming they have accounts outside of the states).

Although the non willful penalty is draconian to say the least, if you have a good enough reason, like living in Canada or the UK all of your life...paying your taxes....abiding by the laws of your country...and honestly NOT knowing that you had this obligation with the IRS..i think you are going to be OK.

Remember as well that, although you divulge all of your FBAR information on your bank accounts, they DO NOT have the authorization to go into said accounts due to the Canadian banking privacy act.

They WILL however be able to look into your account information if you are under investigation, assuming you are targeted AND assuming FATCA comes into effect in 2014.

If FACTA becomes delayed again, then there fishing expeditions are on hold until such time.

This is why it is so very important to make sure the information on your FBARs is accurate and correct.

Another thing we haven't talked about here is the new IRS form that is to be filed with your 1040. Not sure of the form # 8838 or something...anyway, your account information will have to be tabulated on this form as well. Not sure but I think there is a draft version on the internet, and I think it comes into effect in 2011
 
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